Mohd Tarmidzi bin Ahmad Nordin: An integrated Bancatakaful model in practice

An integrated Bancatakaful model in practice

by Mohd Tarmidzi bin Ahmad Nordin tarmidzi.an@etiqa.com.my International Takaful Summit 2009 TheJumeirah Carlton Hotel, London 1st and 2nd July 2009

1

Top line Growth of the Malaysian Takaful Industry

2

Family Takaful New Business Growth Contributions (RM 'million)

CAGR 31.7% 2,500.0

+29.9% +15.8%

2,000.0

+74.6%

1,500.0 1,000.0

+18.1%

+20.2%

500.0 -

Data Source: BNM & ISM

Family Takaful

Market Share

3

Growth of Family Takaful New Business

2004

2005

2006

Individual Ordinary

603.7

Group Ordinary

725.5

2004

2007 Annuity

1,266.6

2008*

Investment Link

1,467.2

1,905.4

2005

2006

2007

2008

Family Takaful

8.5%

10.0%

15.0%

16.2%

21.1%

Life Insurance

91.5%

90.0%

85.0%

83.8%

78.9%

General Takaful Business Growth Gross Contributions (RM 'million)

CAGR 16.6%

+22.0%

900.0 800.0 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0

+28.5% +22.2%

Data Source: ISM

Takaful

2004

491.9

Insurance

4

-1.9%

+12.1%

2005

2006 Fire

2004 Takaful

Growth of General Takaful Business

551.4

2005

Motor

2007

MAT

2008

Misc

708.8

695.2

2006

848.1

2007

2008

5.5%

5.6%

7.8%

7.1%

7.2%

94.5%

94.4%

92.2%

92.9%

92.8%

100.0%

100.0%

100.0%

100.0%

100.0%

Maybank & Etiqa’s Integrated Bancatakaful / Bancassurance model

5

Maybank’s Insurance & Takaful Sector Maybank

30%

70%

Fortis International

2001

1977

6

Etiqa Insurance

1993

2002

Etiqa Takaful

Etiqa Takaful vs Takaful Industry (contributions in RM 'million)

Family (NB)

General (Gross)

Total

Industry 2008

1,905.4

848.1

2,753.5

Industry 2007

1,467.2

695.2

2,162.4

Growth

29.9%

22.0%

27.3%

Etiqa 2008

771.9

309.3

1,081.2

Etiqa 2007

411.5

230.6

642.1

Growth

87.6%

34.1%

68.4%

2008

40.5%

36.5%

39.3%

2007

28.0%

33.2%

29.7%

Etiqa's Market Share

7

Evolution of Maybank’s Banca business 2001 Etiqa Insurance

2002

427.3

(MLA & MGA) Etiqa Takaful

total

427.3

growth

2004

2005

2006

2007

2008

506.6

678.4

1,155.8

1,228.0

1,696.0

2,139.4

1,944.8

18.6%

33.9%

70.4%

6.2%

38.1%

26.1%

-9.1%

16.3

41.1

101.8

185.8

163.9

481.0

-

(MTB)

2003

!

!

152.1%

147.7%

82.5%

-11.8%

193.5%

506.6

694.7

1,196.9

1,329.8

1,881.8

2,303.3

2,425.8

18.6%

37.1%

72.3%

11.1%

41.5%

22.4%

5.3%

RM 'million

figures as at 30th June each year excluding annuities.

US$1 = RM3.50

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Why did Maybank embrace Bancassurance / Bancatakaful?

Maybank Group

Distribution Fees From Insurance & Takaful Sales

Shareholders Return From Insurance & Takaful Subsidiaries Other Benefits?

9

Management Fees from Managing Insurance & Takaful Assets

Bancassurance = Bank Strategy Consumer Banking drives Bancassurance rides on the back of the retail capabilities of Maybank

Customer Segment

Customer Segment

Customer Segment

Consumer Sales Executives / Financial Executives / Personal Financial Consultants Consumer Banking MARKETING & SALES Manufacturer

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Manufacturer

Manufacturer

Manufacturer

Integrated Working Model & Governance Structure

Maybank Consumer Banking

Sales Support

Consumer Solutions • • • •

Daily Banking Savings and Investments Loans and Mortgage Protection

Product Development

Etiqa

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Customers

Customer Service

Customer Centric Approach (1)

TARGET SEGMENT

Needs segmentation

HIGH NETWORTH INDIVIDUALS

AFFLUENT

MASS AFFLUENT

MASS

12

Access to Global Market & Investment Banking products

Diversified Investment

(Basic) Financial Planning

Basic Needs

Customer Centric Approach (2) Fully fledged Group Customer Information File • • • •

single view of the customer master for all linked products major data cleansing finished, going concern mode daily update of Group Data Warehouse

Marketing knowledge • • • • •

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data warehouse and analytical tools customer experience unit customer segmentations customer ownership customer profitability

Distribution channels (1) •

Fully operational Customer Care Center • • • •

•

Network development • • • • •

•

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inbound and outbound all customers financial needs focus still on servicing but shifting CRM tool supported New concept branches implemented New signature branches implemented changes in functions and roles optimization of branch locations straight through processing

Internet banking (Maybank2U.com) and Mobile Banking (M2U mobile)

Distribution channels (2)

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•

Operational CRM and WM in all branches

•

Fully integrated Point-OfSales system for Insurance in branches and Customer Care Center

•

Straight through processing

•

Re-engineered claims handling process implemented

Sales structure Customer segments (by income)

Sales channels

HNW

Products

Investment Website Branch

Affluent Insurance/takaful Mail/e-Mail/Fax

Mass Affluent

Mass

Mobile Sales Force

Financing Call center

Deposit ATM/KIOSK

INFRASTRUCTURE

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Suitable products for bancassurance Simple for Customer •Solution to a clear need •Easy to Understand •Avoids ambiguities Integrated Maximize cross over opportunities between bank and takaful / insurance products

Flexible •Adopts coverage to range of situations •Tailors payment to different possible solutions

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Bancassurance Products

Simple for Bank •Increase potential for cross selling •Integrates into system

Competitively Priced •Matches competitiveness offerings •Reflects value of customer relationship

Branding Strategy •

As far as the customers are concerned, there is only one face to the customer – Maybank

•

We choose to ride on the Maybank’s brand / reputation in respect of Maybank Banca.

•

Suffice to say product is underwritten by Etiqa Takaful or Etiqa Insurance

•

Some advantages: • • •

Lower marketing investment; Higher customer acceptance Better identification by bank’s sales force

•

Disadvantage however reputation of takaful company / insurer can be affected if bank’s image is damaged and vice versa;

•

Only for third-party bancassurance channel do we maintain Etiqa’s own branding by keeping it separate from the bank.

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Critical Success Factors

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CSF1: Greater Integration = Greater Success Bancassurance = Bank Strategy •

The top management of Maybank has shown full commitment to selling takaful / insurance products exclusively for Etiqa as one its core revenue generators especially to retail customers

•

Takaful / Insurance activities are well integrated into the many aspects of Maybank operations;

ated Integr Model

•

Maybank takes the lead in coming up with a cohesive marketing strategy with Etiqa Insurance & Takaful.

•

The annual targets and sales campaign for Etiqa and Maybank,

•

Maybank’s brand is what the bank customers see.

•

ution b i r t s i D ent It had taken some time to reach this level Agreem Model

20

Consumer Banking must be aligned

ediate m r e t In Model

CSF2: Maximise Sales Capacity Keep It Simple & Standardised (KISS) Products designed with input from Maybank to best fit banks delivery strategies, distribution strengths and meet appropriate needs of the targeted bank customers: • • • •

easy to explain, easy to understand (so that everybody can sell) tailored to specific needs, not ‘one size fits all” low advice content, high value content.

Look & feel like banking products • • •

•

features (Bank + protection) terminology transparency / information

pricing & compensation different from agency based products

Processes • • •

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minimise administrative complexity minimise exceptions / special features clear & simple sales processes

Recent Direct Marketing Campaign - Overall Results

SENIOR PA

SENIOR PA

Estimates

Actual

LIFESTYLE SECURITY

LIFESTYLE SECURITY

Estimates

Actual

TAKAFUL PA

TAKAFUL PA

Estimates

Actual

Mailing Qty

100,000

98,337

175,000

175,502

175,000

175,524

Cost per Name

RM3.00

RM2.47

RM3.00

RM2.96

RM3.00

RM2.65

Response Rate

1.5%

3.99%

1.5%

4.82%

1.5%

2.51%

RM402

RM520

RM352

RM422

RM352

RM501

RM603,077

RM2,037,598

RM923,462

RM3,574,500

RM923,462

RM2,206,780

50%

12%

57%

14%

57%

21%

Average Contribution Total Annual Contributions Acquisition Rate

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CSF3: Suitable end-to-end Processes Maybank invested in technology (Care POS & BPI Trax) and re-engineered a number of processes both in the front and back offices in order to deliver top quality service (at low cost).

Processes that have made Maybank’s integrated bancassurance model successful : • • • • • •

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Straight through processing Policy issuance upfront; Industrialised sales process / simple underwriting; Automation of premium payment / auto-debit, standing instructions; Claims / benefit payments using auto credit; Optimise Customer Profile Management;

CSF4: Best Value For Money Product & Service Packages

Win - Win - Win situation We ensure there is alignment between the value proposition to all involved parties: • • •

Customers; Maybank (as distributors) Etiqa Takaful and Etiqa Insurance (as manufacturers)

Our bancassurance products are amongst the best value for money offered in the market for the clients arising from: • •

Lower management expenses; Lower distribution expenses

Maybank share advantages with the customers

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Some Challenges

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Cultural difference between banking and insurance (takaful) business For Maybank: •Transition from transaction oriented to relationship oriented •Lack of expertise in insurance (takaful) & underwriting; •insurance (takaful) products are different and complicated •Bad claims experience can damage relationship with customers.

•Third party bancassurance partners are not as integrated

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For Etiqa: •Training of Maybank staff to promote insurance (takaful) products •Sales incentives and motivation processes; •Shifting of business to banks; •Integration of bank front-office and insurer’s (takaful operator) back-office processes (straight through processing); •Managing channel conflicts now that Etiqa takes a multi-channel approach as bancassurance can upset agents / traditional channels.

Peace to All

Mohd Tarmidzi bin Ahmad Nordin tarmidzi.an@etiqa.com.my

www.etiqa.com.my

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